Manawatu Standard

Pressure on village unit prices to rise

- Marta Steeman

Retirement villages’ unit prices are rising and may be 8 per cent higher by the end of the year, researcher­s say.

The prices for licences to occupy units and apartments in villages may be playing a slow catch up with the runaway housing market against which the village prices are set but usually at a lower price than the average house price in the location of the village.

Investment researcher­s at financial advisory company Forysth Barr this year started a new index tracking the movement in the sales prices of licences to occupy units and serviced apartments at four big retirement villages businesses which are listed on the NZX.

The operators are Ryman Healthcare, Summerset Group, Oceania Healthcare and Arvida Group.

Forsyth Barr analyst Aaron Ibbotson said the index rose 4.2 per cent in the first six months of 2021 and if that pattern continued prices to buy occupation rights might rise by about 8 per cent for the year.

But that depended on when the villages reviewed their prices.

The researcher­s estimated that in the past the average licence to occupy prices for village units and apartments rose about 3 per cent to 4 per cent a year.

While Summerset and Arvida started 2021 with a bang, with about a 6 per cent rise in prices, Ryman and Oceania had only modest rises.

But now Ryman’s prices were rising steadily, at an estimated 0.5 per cent to 1 per cent a month for units and serviced apartments, Ibbotson said.

The average price increase for units and serviced apartments for the four aged care operators sat between 3 per cent and 5 per cent for six months to the end of June with units rising faster than serviced apartments. Villages were likely to bring in modest price increases spread over several years, Ibbotson said, even though house prices had risen massively over the past year.

Spreading the price rise over time would support demand for village units and apartments.

Retirement Villages Associatio­n executive director John Collyns said the general principle for village operators was to price the licences to occupy about 25 per cent to 30 per cent less than the average freehold house price in the location of the village.

The aim was for residents to release equity in their homes and have cash left over to put in the bank.

He expected the price of licences to occupy retirement units to rise because residentia­l dwellings had risen in price, and retirement village operators would benefit from that ‘‘rising tide’’ of prices.

Grey Power treasurer Roy Reid said the organisati­on did not get many complaints about the cost of retirement units, though he had heard from some people in older properties in Dunedin who had said they could not afford units in a couple of new villages developed there.

Most complaints about retirement villages that Grey Power heard were related to the cost of weekly fees, the time it took for the operator to payout families when a resident had died and the size of the deferred management fee that was taken by the operator when a resident died, Reid said.

 ??  ?? Unit prices of retirement villages are rising and may be 8 per cent higher by the end of the year, researcher­s say.
Unit prices of retirement villages are rising and may be 8 per cent higher by the end of the year, researcher­s say.
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